Analys från DailyFX
Intraday Scalp Set-up in AUD/NZD
Talking Points:
- Tricky Trend Channel on AUD/NZD Daily Chart
- Emerging Short Set-up on Lower Time Frames
- Key Resistance Zone for Initiating New Positions
The timely trade set-up we spotted yesterday in GBPJPY is doing extremely well, having touched the projected support zone and then shooting higher on the very first try.
Somewhat ironically, this confirms that the current trading environment is not especially easy to trade, and recent trade results will show that the probability has dropped over the last few trades. (Review recent trading track record on the Straight Talk Trading Blog.)
In this type of environment, an overly defensive trader’s account may suffer death by a thousand cuts as trades produce several small losses in a row. On the other hand, overly aggressive traders can really blow up in times like these.
This is a rite of passage for newer traders, and many never make it past this stage. The trick is to accept small losses when they occur, but be willing to hold off on taking profits when they arrive. Instead, trail a stop loss behind price, thus effectively balancing reward and risk. When properly using this method, one good trade can easily recoup all the losses and more.
Many traders go wrong by adjusting their strategies to take profit more quickly, and while this usually does improve probability (at least by a little), it inevitably leads to inadequate reward. Traders who choose to go this route could spend a lot of time trying to recover recent losses even when trades do move in their favor.
To this point, entry on the break of the four-hour pin bar on yesterday’s GBPJPY trade would have yielded a stop loss of 33 pips. At the time of writing, price had gone 190 pips in the direction of the trade with no real threat of turning back. (Moreover, pattern traders will note a series of very friendly bull flags). This more than covers losses from the two prior trades that did not work out as intended.
Now, today’s trade in AUDNZD continues to reflect the heighted uncertainty in the market, creating opportunities only on the lower time frames.
The daily chart below shows a clear trend, but the thin channels and their increasing angle makes this a tricky time frame to trade.
Guest Commentary: Tricky Channels on AUD/NZD Daily Chart
Meanwhile, the four-hour chart below presents a clearer trend in the form of an expanding wedge. When price rises to test that resistance, there should be a reaction, which will hopefully translate into a continued move down. At the very least, there should be enough for some profit-taking.
Guest Commentary: Emerging Short Opportunity in AUD/NZD
The hourly chart, however, provides the best clues about the key resistance zone from which traders can initiate new short positions in AUDNZD.
Guest Commentary: Key Resistance Zone for AUD/NZD Shorts
Due to the choppy nature of the current market, the estimate runs conservatively higher than the actual line of resistance in order to account for overshoot. This key resistance zone coincides with previous levels of support and resistance and is estimated as 1.0820-1.0850.
The 15-minute chart (not shown) will provide the trigger for this AUDNZD short trade, and the usual pin bars, bearish engulfing patterns, or bearish reversal divergence would all qualify as valid entry signals. As always, it’s good to be prepared to take two or three cracks at gaining an entry.
By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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